According to yesterday’s release of the consumer price index in the US, in September, the prices of goods and services for personal consumption continued the trend of widespread growth in the American economy. Inflation, with a growth rate of 8.2 percent year-on-year (+0.4 percent month-on-month), exceeded market consensus (8.1 percent year-on-year or 0.2 percent month-on-month), but also slowed by 0.1bp compared to the annual change in August.
Core inflation, which excludes energy and food prices, accelerated to 6.6 percent (up from 6.3 percent in August), marking the highest annual growth rate in the last 40 years. On a monthly basis, core inflation recorded a growth of 0.6 percent again. Compared to August, energy prices fell by 2.1 percent (+19.8 percent year-on-year), while food prices rose by 0.8 percent (+11.2 percent year-on-year).
With a growth of 0.8 percent month-on-month, service inflation achieved the largest monthly change since August 1990. Housing prices, which make up the largest share of services, recorded a monthly increase of 0.7 percent (+8.0 percent year-on-year). Along with strong growth in medical service prices, high food and housing prices reflect a significant increase in the costs of basic living necessities.
Although inflation is slowing, it will remain high
These three mentioned categories contributed to the annual growth of the consumer price index by as much as 4.2 percentage points. Although a third consecutive annual slowdown in overall inflation has been recorded, geopolitical risks (the decision of OPEC+ countries to reduce oil production, continued supply chain disruptions due to the war in Ukraine, potential bans on Russian aluminum imports) could keep inflation at elevated levels.
On the other hand, in the coming months, we can expect modest annual inflation growth rates due to the high base from last year, as well as due to already evident strong inflationary pressures in the same period last year, according to an analysis by Raiffeisen analysts.
As inflation continues to hover around the highest levels in 40 years, market expectations have not changed. It is still estimated that the Fed will again raise key interest rates by an aggressive 0.75 percentage points at the two-day meeting on November 1 and 2, marking the fourth consecutive meeting.
Despite this, the market sharply recovered yesterday, with indices ending with gains of over 2 percent. The financial and energy sectors led the gains.
